German-American Discourse on Politics and Culture

September 05, 2015

It seems like everyone in Germany is piling on Facebook these days. The social media giant is being blamed for attacks against migrants and for facilitating neo-Nazi activity. "Facebook must act!" is the rallying cry. Any posts expressing hate against foreigners must be extinguished, commenters punished, right-wing accounts banned.

The editors of the news site NRZ conducted a test whereby they reported a video of a neo-Nazi giving the Hitler salute to Facebook and then waited to see how long before the post was taken down. Facebook didn't take the video down and stated that the content did not violate its guidelines:

(According to media reports, the company admits it has made mistakes in taking down racist content. "It is unfortunate that some mistakes have happened. We know it can be frustrating," said a spokesman for Facebook. He explained that the German employees of Facebook are not responsible for deleting racist content, but rather teams located abroad. They are not specifically tasked with seeking out posts that are hostile to foreigners.)

I'm not in favor of censoring content on the Web. I know that there are laws in Germany against displaying the Nazi salute, but I oppose those laws. We allow hate speech under the First Amendment of the Constitution in the United States - even Holocaust denial is permitted. I would rather the hate be out in the open for everyone to see and condemn. German democracy is strong enough to tolerate that.

Besides, Facebook is used to organize aid and support to the refugees, and for organizing the demonstrations against the neo-Nazis. Keep Facebook open and free! (BTW, I do not have a FB account)

June 04, 2015

Anyone who regularly reads the Web sites of the mainstream German media outlets cannot help but be struck by the huge number of pro-Russian commenters. Putin certainly has his fans in Germany, but sometimes the grammar or odd word choice arouses suspicion that not all of these commenters are German.

The respected weekly Die Zeit has been hit hard by these "troll" commenters and recently pointed to Kremlin as the source of the anti-West vitriol in the reader forums:

(Certainly there are indications that the Kremlin has been arming itself for the battle for public opinion. The Russian propaganda machine has set its sights on social media sites and reader commentary sections of important media properties. The debate concerning the manipulation of comments - especially in Germany, England, and the US - has already begun. But despite the high degree of suspicion, concrete proof is difficult to come by.)

Well, now we have plenty of concrete evidence (Beweise). The New York Times Magazine is publishing a fascinating piece by Adrian Chen, a journalist and writer, who managed to penetrate the Internet Research Agency, a vast disinformation operation financed and run by the Kremlin. The "Agency" hires thousands of well-educated Russian young people who are paid generously to "troll" social media sites and reader forums in Russia, Europe and the United States to wreak havoc.

One of these paid trolls - a young woman named Ludmila Savchuk, described in detail her work at one of the agency sites in St. Petersburg:

Every day at the Internet Research Agency was essentially the same, Savchuk told me. The first thing employees did upon arriving at their desks was to switch on an Internet proxy service, which hid their I.P. addresses from the places they posted; those digital addresses can sometimes be used to reveal the real identity of the poster. Savchuk would be given a list of the opinions she was responsible for promulgating that day. Workers received a constant stream of “technical tasks” — point-by-point exegeses of the themes they were to address, all pegged to the latest news. Ukraine was always a major topic, because of the civil war there between Russian-backed separatists and the Ukrainian Army; Savchuk and her co-workers would post comments that disparaged the Ukrainian president, Petro Poroshenko, and highlighted Ukrainian Army atrocities. Russian domestic affairs were also a major topic. Last year, after a financial crisis hit Russia and the ruble collapsed, the professional trolls left optimistic posts about the pace of recovery. Savchuk also says that in March, after the opposition leader Boris Nemtsov was murdered, she and her entire team were moved to the department that left comments on the websites of Russian news outlets and ordered to suggest that the opposition itself had set up the murder.

And the St.Petersburg Agency operation - huge as it is - is just the tip the iceberg:

Savchuk’s revelations about the agency have fascinated Russia not because they are shocking but because they confirm what everyone has long suspected: The Russian Internet is awash in trolls. “This troll business becomes more popular year by year,” says Platon Mamatov, who says that he ran his own troll farm in the Ural Mountains from 2008 to 2013. During that time he employed from 20 to 40 people, mostly students and young mothers, to carry out online tasks for Kremlin contacts and local and regional authorities from Putin’s United Russia party. Mamatov says there are scores of operations like his around the country, working for government authorities at every level. Because the industry is secretive, with its funds funneled through a maze of innocuous-sounding contracts and shell businesses, it is difficult to estimate exactly how many people are at work trolling today. But Mamatov claims “there are thousands — I’m not sure about how many, but yes, really, thousands.”

It is interesting to read the readers' comments to Adrian Chen's article. "The Agency" is hard at work.

October 19, 2014

Oliver Samwer and his brothers have gotten rich - VERY rich - by copying American Web based products and business models and launching them in Germany. Now, with RocketInternet AG he has systematized the copycat model and taken it global. RocketInternet's early October IPO was hyped as Germany's answer to Facebook and Alibaba. Although the IPO was something of a disappointment, it netted the company and its investors €1.6 billion.

The reporters at Venture Beat, a Silicon Valley technology news site, are upbeat about Rocket Internet and its prospects:

"In Silicon Valley, Rocket is often dismissed as a copy-cat artist, making half-baked versions of other people’s ideas. But that misses the point of what Rocket has become and what it cares about. Its real claim to innovation is its methodical approach to identifying digital business models, launching startups, and then growing them quickly. In the last few years, Rocket has created 65 businesses, fueling its own growth that resulted in its recent $1.8 billion IPO in early October.

While Silicon Valley cherishes originality and the romantic notion of the lone founder conjuring innovative ideas, Rocket is focused on speed and size in order to seize opportunities in less sexy markets. Where entrepreneurs in Silicon Valley search for ideas to dazzle their peers, Rocket pursues what it calls “butter and beer” businesses that aim to fill simple, everyday needs of consumers in places where online services are not quite as commonplace as they are in an area like San Francisco."

Fans of RocketInternet point out that Facebook's IPO was also disappointing; today the social media behemoth is a Wall Street darling. And RocketInternet shares have recovered and are trading above the initial offering price. So why am I not buying RKET shares?

1) Lack of Transparency. RocketInternet is an ideal investment for sophisticated Private Equity investors - but not for the general public. It is unlikely that the company could have satisfied SEC regulations for a US listing. What is the small investor buying? We have very litlle ingsight into the startups around the globe that the company is incubating. There is very little information on how the investments in the Rocket's portfolio companies were valued; certainly the valuations were not performed under US GAAP accounting standards. In other words, the investment requires blind faith in the Samwer brothers' ability to execute.

2) Massive losses thus far. Rocket says its “most mature companies, which we refer to as proven winners,” have posted total revenues of €757 million ($955.8 million). But they have also sustained a total of €442 million ($558.1 million) in losses.

3) Low barriers to entry. This is the achilles heel of the "copycat model". If Rocket can imitate successful American ecommerce start-ups, so could local entrepreneurs and angel investors who understand the local market dynamics better than managers in far-off Berlin.

4) Political risk. Rocket is effectively shut out of the US and China, and therefore is forced to set up shop in emerging markets - including highly corrupt countries like Nigeria and Russia. Those are markets the big institutional investors are avoiding like the Eboloa plague. So the question is, what is the exit strategies for Rocket-backed Internet start-ups in countries with non-functioning capital markets? The value proposiiton of Rocket internet depends on lucrative exits for its portfolio companies - either through IPOs or acqusition.

5)Transparency again. American investors rely on quarterly reports (10Qs) to evaluate a company's progress or lack-thereof. But Rocket Internet isn't required to report quarterly results; and its semi-annual reporting requriements are perfunctory.

My recommendation? Sell and avoid RKET.DE and buy YHOO - not so much for its own business prospects, but for its discounted ownership stake in BABA.

June 01, 2014

Anyone reading online articles on the Websites of the German press concerning the situation in the Ukraine can't help but notice the overwhelming pro-Putin sentiments expressed in the reader comments. The highly-respected liberal weekly Die Zeit has been hit especially hard, and recently published a response:

(Certainly there are indications that the Kremlin has been arming itself for the battle for public opinion. The Russian propaganda machine has set its sights on social media sites and reader commentary sections of important media properties. The debate concerning the manipulation of comments - especiatlly in Germany, England, and the US - has already begun. But despite the high degree of suspicion, concrete proof is difficult to come by.)

The Kremlin has recruited an army of young bloggers and hackers to flood sites such as Die Zeit or the Huffington Post with comments attacking the west for "hypicrisy" and praising Putin for standing up to "US Imperialism".

(Media agencies controlled by the Kremlin pay a group of mostly young people to place the same text modules under articles pertaining to Russia or post to Facebook. A common theme is to accuse Western politicians of hypocrisy and a double standard. The workers makeabout $800 a month for their "copy and paste" service to the Fatherland, praising the "prudent" actions of the Russian government.)

An article in Die Welt provides a good example of how the Russian Propaganda Machine works. When a piece favorable to Russia recently appeared in Der Spiegel (no doubt by columnist and Putin-apologist Jakob Augstein), the following directive went out from the Kremlin: "Bitte auf FB (Facebook, d. Red) und Twitter reserviert die gute Analyse loben spiegel.de/politik/auslan….(+ Erwähung in @mestngaset (Lokalzeitungen) und @vlastei (Behörden) am Ende des Tweets".

February 23, 2014

DId Mark Zuckerberg just throw away $19 billion of Facebook shareholder wealth? He bet the farm on the messaging app, but will Whatapp's 450 million users embrace the new owner? Facebook is an advertising company, and even though Zuckerberg has stated that Whatsapp will remain a separate, independent entity many users in Germany are not convinced and are already jumping ship:

(In the course of one day Threema has doubled its user base. The app allows users to send encrypted messages. In the last 24 hours at least 200,000 smatphone owners have installed the service, the company told Sueddeutsche Zeitung. So according to its own information the service has 400,000 users. The reason for the short-term growth is the acquisition of Whatsapp by Facebook. Whatsapp is by for the leading messaging app in Germany . Here more than 30 million peopel use the service. After the Facebook announcement many are looking for alternatives. )

Of course 200,000 is a miniscule number, but it could be the tip of the iceberg. Ever since the NSA scandal many Europeans are wary of the Internet giants Google and Facebook, and the Whatsapp deal only intensifies the general paranoia about online privacy.

Cloud-based services are not nearly as "sticky" as operating systems such as Windows or iOS - it is quite easy to switch, and there are other apps out there like Threema that have attractive security features.

So did Zuckerberg make an expensive mistake? Was this a desperate attempt to keep Facebook from becoming another MySpace? Time will tell. There were many critics of his acquisition of Instagram for $1 billion - and that turned out to be a bargain.

March 07, 2013

Blogger, social media guru and Spiegel columnist Sascha Lobo has a good explanation for why Internet start-ups in Germany are for the most part pathetic knock-offs that rely primarily on patent infringement litigation in a (largely unsuccessful) effort to stay afloat:

(That is the German Internet malaise: to do in the digital realm only that which is supposedly safe and functions, thereby disregarding the most important aspect of success in the Internet - the constant further development, the small-scale, experimental revisions, the courage to constantly experiment and constantly fail. The irony here speaks volumes: the German fear of failure leads to failure in the digital sphere.)

Most Internet entreprenuers in Silicon valley (and their venture capital partners) experience failure before they have success, and, even then, success may be fleeting. But, far from being stigmatized by failure, it is considered a badge of honor.

(The concept of "perpetual beta" describes the constant, incremental further development of software and Internet platforms, the digital product is never complete, but is rather seen as a permanent experiment, where mistakes make improvements possible.... the Facebook of 2009 would be just as interesting in 2013 as StudiVZ.)

October 19, 2012

Twitter waded into potentially perilous territory on Thursday when it blocked users in Germany from access to the account of a neo-Nazi group that is banned by the government here.

The move was the first time that Twitter acted on a policy known as
“country-withheld content,” announced in January, in which it will block
an account at the request of a government. But the company cracked open
the gates to a complex new era in which it will increasingly have to
referee legal challenges to the deluge of posts that has made the site
so popular.

The company said the goal was to balance freedom of expression with
compliance with local laws. “Never want to withhold content; good to
have tools to do it narrowly & transparently,” Alexander
Macgillivray, the company’s chief lawyer, wrote on Twitter.

Those outside of Germany can read the Twitter feed for the neo-Nazi group Besseres Hannoverhere.

I don't believe that in 2012 Germany should be criminalizing hate speech, even from neo-Nazi organizations. These groups should be watched closely, but they have no chance of gaining much traction in a strong democratice republic. Democracy depends on free spreech - even speech that we hate.

In the United States, where speech is given the most protection among
Western countries, there has been a recent effort to carve out a
potentially large category to which the First Amendment would not apply.
While we have always prosecuted people who lie to achieve financial or
other benefits, some argue that the government can outlaw any lie,
regardless of whether the liar secured any economic gain.

The dangers are obvious. Government officials have long
labeled whistleblowers, reporters and critics as “liars” who distort
their actions or words. If the government can define what is a lie, it
can define what is the truth.

It is about time that Germany stop criminalizing hate speech - even Holocaust-denial. It would make for a stronger democracy and a more open society. The idiocy of the neo-Nazis will become only more marginalized - instead of being martyred.

The very right that laid the foundation for Western civilization is
increasingly viewed as a nuisance, if not a threat. Whether speech is
deemed imflammatory or hateful or discriminatory or simply false,
society is denying speech rights in the name of tolerance, enforcing
mutual respect through categorical censorship.

As in a troubled
marriage, the West seems to be falling out of love with free speech.
Unable to divorce ourselves from this defining right, we take refuge
instead in an awkward and forced silence.

September 10, 2012

I never was a fan of Christian Wulff, Germany's former president who earlier this year was forced to resign in disgrace. Wulff and his wife Bettina were always more interested in the perks of the office instead of serving their country. Ever since Christian Wulff was nominated for the office in 2010 there have been whispers concerning Bettina and her alledged previous work as a call girl. The rumors persist even today, and instead of just ignoring the allegations Frau Wulff has decided to fan the flames by suing eveyone in sight for defamation and slander.

When you search for “Bettina Wulff”
on Google, the search engine will happily autocomplete this search with
terms like “escort” and “prostitute.” That’s obviously not something
you would like to be associated with your name, so the wife of former
German president Christian Wulff has now, according to Germany’s Süddeutschen Zeitung,
decided to sue Google for defamation. The reason why these terms appear
in Google’s autocomplete is that there have been persistent rumors that
Wulff worked for an escort service before she met her husband. Wulff
categorically denies that this is true.

German’s
former first lady now wants to ensure that Google stops autocompleting
searches for her name with these terms. The rumors, she claims according
to the German newspaper’s report, are “defamation” and have “destroyed
her reputation.” For the most part, of course, Google suggestions just
reflect how widespread these rumors are on the Internet. Google’s
algorithms, after all, make these suggestions based on its analysis of
what the majority of Internet users search for.

Going after Google is absurd, since the technology simply reflects the search engine's user behavior. The lawsuit is also counterproductive, since the publicity only ensures that the search term "Bettina Wulf" will always be linked to "Prostitute", just as "Rick Santorum" will always be linked to ....uh, whatever.

November 24, 2010

Google Street View went live in Germany with images of 20 cities. In a twist, Google allowed German homeowners to opt out of the service and have images of their properties pixeled. Some of those pivacy fanatics felt the wrath of Google fans:

Local German media said that several homes that opted out of Street View and asked to be blurred were hit with eggs. In addition, “Google’s Cool” notes were taped to their mailboxes. And people think that Apple has fanboys.

A Google spokesperson responded as follows:

We respect people’s decision to opt out and by no means consider this to be acceptable behavior.

About 3 percent of the households in Germany (244,237 in all) chose to blur their homes. Naturally, not all 244,000+ received an egging, but enough did to make it an issue.

So what don't these citizens what Google users to see? A street scene captured in Mannheim gives us a clue:

But that is nothing compared to the Miracle of the Birth captured by Google Street View in Wilmersdorf (by Berlin).

Facebook,
the social-network service that started in a Harvard dorm room just six
years ago, is growing at a dizzying rate around the globe, surging to
nearly 500 million users, from 200 million users just 15 months ago, writes The New York Times’s Miguel Helft.

In country after country, Facebook is cementing itself as the leader
and often displacing other social networks, much as it outflanked MySpace in the United States. In Britain, for example, Facebook made the formerly popular Bebo all but irrelevant, forcing AOL to sell the site at a huge loss two years after it bought it for $850 million. In Germany, Facebook surpassed StudiVZ, which until February was the dominant social network there.

According to this chart, StudiVZ is no longer even among the top three German social networking sites:

That's not to say that everyone is thrilled with Facebook's global dominance. The German media is reporting with some Schadenfreude that Facebook is losing users in the US. And the German government will try to drag Facebook back into court - this time for violating Germany's privacy protection laws. But none of this will stop the site's relentless march: Facebook's CEO Mark Zuckerberg is now boasting that it is "almost guaranteed" that he will soon have one billion users.